Attention: Spotify is coming to open Pandora's (P) box and teach satellite radio a Sirius (SIRI) lesson. Record labels, you better head for the hills as well. Spotify investor, Napster Co-Founder, and former Facebook (FB) President Sean Parker of the Founders Fund is determined to finish what he started at Napster more than a decade ago. I would not bet against this man either.
He is on a mission to create a one stop shop for all your digital music world needs. In my opinion, he rivals Jobs on the visionary scale and maybe is Jobs 2.0. They were very much at odds with each other near the end of Jobs life which is a telling sign.
I think, finally, he has completed his ultimate music vision with Spotify. This company is next gen cloud computing format where songs are not needed to be individually bought and downloaded to your iTunes library. He is not the original founder as this is a Swedish company but he was added to the board as a liaison to open up the unlimited potential of the American market.
The digital revolution has removed barriers to sharing music. It doesn't cost extra to create another copy of a song anymore and it's easier than ever to get recommendations for music from friends.
The result is that labels are lagging behind because they have layers of bureaucracy and protocols they no longer need. Bands are responding by using other distribution mediums such as Spotify in order to take charge of their own destinies.
Independent musicians can easily distribute their music to Spotify; pay for paid downloads is $.70 USD, pay for streamed songs is on a sliding scale basis determined by the total number of monthly plays an artist receives
Spotify is funded by paid subscriptions, advertisements in the Spotify player for non-subscribers and music purchases from partner retailers. It offers a $10 per month unlimited subscription.
Like Pandora, the payment of a monthly fee removes advertisements. It also removes streaming limits and increases bit rate in some songs. Here is the kicker. It also allows usage of mobile clients for iOS, Droid, Symbian, webOS, Windows Mobile 6.x and Windows Phone 7 and some BlackBerry devices.
In March 2011, Spotify announced that it has one million paying subscribers across Europe. In September the number of paying subscribers doubled to two million, or at least €10 million per month of revenue.
In a bold move, Parker recently decided to integrate the music service with Facebook, requiring users to sign up with a Facebook account. The immediate impact of this move gives Spotify immediate access to Facebook's roughly 800 million users.
Keep an eye on this company. I think it is headed for great things an is an existential threat to Apple's (AAPL) iTunes. If there is a chink in Apple's armor on the music front, this would have to be it. If Parker can expose this weakness with Jobs now gone, perhaps he can take over a dominant market share because he has a dedication, like Jobs, to strive to create the best product bar none.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.